5 Ways to Protect yourself in a Short Sale

Did you ever think that you needed to protect yourself in a short sale? If you didn't we hope you will after this post. A short sale is really just like any other transaction except that you have a bank that needs to approve the price you offered on the home. So in order to make sure things go smoothly you need to make sure a few things happen.

1. Make sure you are THE offer that is submitted to the bank - some agents, incorrectly, submit multiple offers to the bank and let the bank decide. Let's be very clear about this. The bank doesn't own the property in a short sale. They may decide the terms and they will certainly determine what price they are willing to take but it is not their decision to decide which buyer to work with. The seller still owns the home. If the listing agent says they are going to submit multiple offers, not open escrow, or submit offers as they come in find a new home to submit an offer on.
2. Use the C.A.R form SSA (Short Sale Addendum) - this is for California short sales. This form provides the buyer protection in that the buying contingencies do not start until after the buyer receives written approval from the bank. It doesn't make sense for a buyer to spend time and money on a property that the bank may not approve the price so wait (patiently) for the bank to perform their process so you can do yours.
3. Make sure the listing agent has done this before - We are all for people getting experience but it is critical to make sure the listing agent has experience in this process as it is a complicated one for the listing agent as there is far more to do than a standard sale for them.
4. Have preliminary title pulled for the property - your buying agent or the listing agent can supply this for you from their title representative. This will show you liens on the property and give you a clear picture of what has occurred (in a title sense) with the property.
5. Make sure the escrow company is familiar with short sales - It is important to have an experienced escrow company that embraces the short sale process and doesn't charge the buyer cancellation fees. Make sure you read all of their documents and interview the escrow officer before you open escrow.

We hope that these 5 Tips make sure that you have a successful short sale and help you protect your time and your money.